Friday, December 28, 2007

Book Review: When the Game Was Ours

(Written January 18, 2011)

When the Game Was Ours is a treat for any basketball fan. Apart from the firsthand commentary from both Magic Johnson and Larry Bird, the book is surprisingly personal.  For example, I had no idea Larry Bird's father committed suicide when he was 16 years old, or that Larry Bird almost decided to stay in his small town and get a "normal" job until his mother reminded him of her expectation that he would be the first in the family to graduate college (which Bird did--even after he was drafted by the Celtics while in college).  I don't want to pontificate my own interpretation of the book, so I'll just share some sections I found interesting:

Larry's teammates were sometimes jealous of the attention he received--back when Magic and Bird played, there were fewer NBA teams, so the talent level was higher across the board.  So-called "sixth men" at that time could have easily started on many NBA teams today.

"Somebody asked me once how I felt about all that [the jealousy from teammates]," Bird said.  "I told them, 'Hell, I'm jealous of them, too.  I'm jealous because I never got to play with a Larry Bird.'" (pp. 47, 2009, hardcover)

On revenues and revenue-sharing: 

"By 1981...60 percent of the gross revenue, which was hovering at $118 million, was being paid out to the players.  The formula had to change or the league was going to be out of business."  "In March 1983...the salary cap...[paid] the players 53 percent of the league's defined gross revenue (television and radio revenues and gate receipts) and a guaranteed $500,000 a year in licensing."  (pp. 99)

"In 1984 the NBA's retail merchandise generated $44 million.  By 2007 that number had jumped to a staggering $3 billion under [David] Stern's watching eye." (pp. 109)

"In 1979, the league's four-year deal with CBS was worth $74 million.  By 2002 the league had inked a six-year deal with ABC, ESPN, and TNT valued at $4.6 billion." (pp. 110)

"[I]n 2002, the league signed a network contract valued at $4.6 billion, a significant upgrade over the four-year, $74 million pact the NBA inked in Magic's and Larry's rookie season." (pp. 312)

On Isiah Thomas, who ends up looking like the least classy player in the book: 

"Isiah [Thomas] kept questioning people about it [Magic's sexuality]," Magic said.  "I couldn't believe that.  Everyone else--Byron [Scott], Arsenio [Hall], Michael [Jordan], Larry [Bird]--they were all supporting me.  And the one guy I thought I could count on had all these doubts.  It was like he kicked me in the stomach." [pp. 241]

"I'm sad for Isiah [Thomas].  He has alienated so many people in his life, and he still doesn't get it.  He doesn't understand why he wasn't chosen for that Olympic team, and that's really too bad.  You should be aware when you have ticked off more than half the NBA." [pp. 263]

Dennis Rodman's reaction to playing with Magic after the HIV announcement: 

Rodman eliminated the awkwardness on his very first trip down the floor, when he elbowed Magic in the back, then bodied up on him and bumped him in the post. "C'mon now," Rodman said to Magic. "Show me what you got." ... After a few minutes, the players seemed to relax." [pp. 249]

Bird on tipping and frugality: 

In his rookie season, the first time Bird went to New York with the Celtics, he and Rick Robey popped into a bar to have a brew. When he saw the prices on the tavern's menu, Larry abruptly stood up and walked out.  Years later, while dining with his teammates in a trendy New York eatery, the players began collecting money for the bill.  Told they were going to give the waiter a 20 percent tip, Bird said, "What for? All he did was deliver the food."  He stood up, grabbed the tip money, and strode unannounced into the kitchen.  He handed the astonished cook a fistful of bills, then walked out. [pp. 270]

Bird's politeness: 

"Bird...insisted on calling the commissioner Mr. Stern." (pp. 107) 

Thursday, December 27, 2007

Chuck Thompson's Smile When You're Lying

Thompson's Smile When You're Lying is the funniest book I've read since Sedaris' Me Talk Pretty One Day. Thompson writes travel stories you don't often hear about in the sanitized media, which include paintbrushing with unorthodox body parts, possibly being robbed by seemingly demure religious women, and writing love letters for food--and that's just the first chapter. Thompson knows how to write, is opinionated, and interesting, which usually produces a great book filled with unusual insights:

"[Bruce Lee's] kitty-cat squealing and falsetto yelping always conveyed to me an understanding of just how laughable all that in-your-face showboating is. I'm not sure what sound the koala makes in anger, but if I ever get back into kendo, that's the one I'm going to adopt as my battle cry." (p. 82, Holt Paperback)

Thompson's rants will become legendary in time--here's one on public school teachers:

"And, yes, poor unappreciated teachers. I did say sweet deal. American public school teachers have the world's best PR operation going. Whining every chance they get about how demanding their jobs are, how many 'extra hours' they put in, how little they make, how much of their own money they have to spend just to do their jobs, how noble they are working this job that nobody ever asked them to do--welcome to the f*cking world...

You think you got it tough? You don't got it tough. American teachers would crumble if they ever had to work the real hours of a cabbie, doctor, bartender, fisherman, truck driver, small-business owner, hotel clerk, mechanic, architect, janitor, musician, surveyor, accountant, or the million other jobs that don't observe weekends, much less every city, county, state, and federal holiday on the docket, almost three months' paid vacation a year, and pension programs funded out of the public trough. How is it we go through school painfully aware that half our teachers are lazy or incompetent or pathological control freaks, then turn around and let them convince us what a bunch of saints they are as soon as we become taxpayers?" (p. 100)

Thompson's views on Americans' general fear of traveling to South America are just as pellucid as his other opinions:

"Despite being home to Angel Falls, the Gran Sabana wilderness, and parts of the the Andes, Amazon River, and Carribbean coastline, fewer than half a million international visitors venture into the majestic Venezuelan countryside... This is in large part due to the fact that, fear being the lietmotif of all good propaganda, about 75 percent of Americans are convinced that any trip south of Texas will involve some combination of bribery, kidnapping, armed revolt, the most toxic GI diseases this side of the Congo, knives pulled in macho bar duels, and a probable colonoscopy at the border." (p. 118)

Thompson's ability to use sharp humor to defuse common misconceptions about travel and the world is unparalleled. One gets the feeling that he's kept all of his non-politically-correct secrets hidden to appease the gods of corporate fealty and finally decided to unleash his wisdom on all of us, decorum be damned. For example, we've all seen the alcohol ads go from Swedish bikini team to "drink responsibly" slogans. But after Thompson writes, "When the beer companies start running ads lecturing the public about responsible behavior, you sense a civilization in decline" (p. 129), you realize beer companies advocating responsibility does appear, on second glance, to be a strange combination. Those "a-ha" moments come regularly and wrapped in laugh-out-loud lines throughout the book. You owe it to yourself to read Smile When You're Lying, especially if you're looking for a good laugh.

(One point I feel compelled to make, in an act of true lawyer-ly nitpicking: Thompson bemoans's attempt to increase sales using sexy women on its magazine cover, but his own book features a picture of a blonde woman in a bikini holding a margarita, beckoning readers with her pneumatic charms.)

Bonus (added on August 31, 2015): "If there were a fundamental principle that once separated America from the rest of the world, I'd nominate institutional integrity.  More simply, public honesty.  I'm not suggesting that dishonesty isn't readily found in every civilization, that a Golden Age of American honor ever existed...Nor am I parading myself as a paragon of virtue.  We all lie, to some degree, usually in petty ways, for the sake of discretion or keeping the peace or perhaps on occasion simply because it's the most expedient means available to get what we want.  Still, lying and cheating--perhaps other than to avoid hurting someone's feelings--has never been openly accepted or condoned in the United States, much less celebrated as a 'genius' operational tactic (when done with Rovian finesse) from the boardroom to the courtroom.  At least, not until recently....Worse, Americans seem to be reveling the descent...American society is no accident; it didn't evolve by providential decree; its success wasn't inevitable...Americans have historically understood that to create a country in which half the world aspires to live, the first prerequisite is the integrity of its public and private institutions.  That's the foundation upon which the country was assembled and its illustrious future once determined...What's being overlooked in the rush to save the planet, however, is that we're also pissing away a social gift as great as any people in history have been bequeathed.  And if we don't resist the seduction of the seemingly inevitable road in front of us, it won't matter how much fossil fuel we stop burning, we'll fail to preserve the part of us that mattered most in the first place." -- Chuck Thompson, To HellHoles and Back, pp. 309 et al, paperback, Henry Holt and Company. 

Friday, December 7, 2007

The Age of Turbulence, by Alan Greenspan

Greenspan's new book is the opposite of his opaque speeches to Congress; here, he's remarkably human and clear. There are several funny tidbits about his life, including a very obtuse, meandering dedication to him in his father's book when he was young, which may have influenced Greenspan more than he may want to admit. His love for his wife comes through loud and clear, and the book includes a delightful picture of him at the piano with her.

However, Greenspan offers nothing new or insightful in his book other than a life-changing interaction with Ayn Rand, which led him inexorably down the path of libertarianism. (And yes, that's a contradiction for a government economist, if you're keeping score.) His comments on over-dependence on foreign oil, "creative destruction" causing U.S. citizens to become concerned about their quality of life, corn-based ethanol being a boondoggle, warnings against protectionism and economic populism, etc.--this has all been said before, by someone else, somewhere else. Greenspan does advocate a higher tax on gasoline to reduce consumption, which is surprising for a libertarian, but again, not a new idea.

Greenspan also compares the U.S.'s main competitors, especially the U.K., Russia, Japan, France, Italy, and India. He concludes that India needs to overthrow its labyrinth bureaucracy to be competitive, France needs to reform its union-based employment system, Italy made a wise decision to join the EU, and Japan's emphasis on saving face may harm its future growth. He also contends, without saying so directly, that Russia may be the next rising power due to its natural resources and military strength.

Greenspan mentions that the currency markets are more difficult to manipulate than one might think, and points out that Japan bought 20 billion U.S. dollars in one day in 2004, and the dollar-yen exchange rate barely moved. On the other side of the currency divide is Argentina, and Greenspan briefly discusses Argentina's pegging of its currency to the dollar, which led to a financial restructuring. Again, nothing new is said, but Greenspan did have access to many high level politicians and economists, so he is able to discuss, for example, Gerald Ford's "ordinary Joe" persona with more credibility. (For the record, Greenspan did not like Nixon, but found him to be very intelligent, and mentions later in the book that until Clinton, he did not meet anyone as intelligent as Nixon in the White House.)

Although he offers nothing profoundly new (except for perhaps the role liquified natural gas might play in our future energy plans), Greenspan's book is pleasant to read and gives the reader an insight into his sense of humor and tastes. Greenspan's overall message seems to be that the U.S. owes the Constitution much credit as its backbone of stability; citizens should be careful not to revert to the old ideas of centralized government; and the Federal Reserve should maintain an environment of controlled optimism.

Wednesday, October 10, 2007

Borders and Iraq and War

I spent some time at the Santana Row Borders after work today. I was browsing through George Orwell's essays and Edmund Morris's The Rise of Theodore Roosevelt. Both books had interesting quotes that could apply to the war in Iraq:

Better to have an end full of horror than a horror without end.

Do they prefer the risks of a long peace? Or the certainty of a long war?

T.R. also has an interesting quote, "
No triumph of peace is quite so great as the supreme triumphs of war." See

To show you T.R.'s great complexity, I will leave you with some beautiful paragraphs from a letter T.R. wrote to a friend, the French poet Frederic Mistral:

"You teach a lesson which none more than the American people, ardent nation, anxious and desirous of acquiring riches, needs to learn. This lesson reminds us that after the acquisition of a relatively considerable material success, the things which really count in life are things of the spirit.

Industries and railroads have their value, of course, but courage and endurance, the love of our children, the love of our country and our hearths, the love and imitation of heroes and the heroic virtues, are really the highest things in life. Without them accumulated riches, imposing and widely heralded industrialism, feverish activities, are neither profitable to the individual or to the nation.

I do not underestimate the value of those things which are the body of the nation. I only desire that they shall not make us forget that beside the body there is a soul."

Tuesday, September 18, 2007

Nemesis: The Last Days of the American Republic, by Chalmers Johnson

Chalmers Johnson’s book, Nemesis: Last Days of the American Empire, sounds sensationalist. Unfortunately, the content is anything but, and even the most diehard patriot will feel deflated after seeing the vices of the Bush II presidency laid bare. On page 249 of the Metropolitan Books 2006 hardcover edition, Johnson quotes Judge Damon Keith, who wrote, “Democracies die behind closed doors...A government operating in the shadow of secrecy stands in complete opposition to the society envisioned by the Framers of the Constitution. When government begins closing doors, it selectively controls information rightfully belonging to the people. Selective information is misinformation.” Johnson also quotes James Madison, who wrote, “A popular government without popular information, or the means of acquiring it, is but a prologue to a farce or a tragedy, or perhaps both.” Johnson proves that Bush has used his executive power to prevent information from reaching American citizenry throughout his book. Johnson lists the Bush II administration’s acts and contrasts it with Rome and the original intent of America’s founders. While all of this may be old hat to anyone who’s been reading The Guardian or watching the BBC, the slow trickle of information provided to American citizens about the Bush II administration seems insufficient to cause anger because of the secrecy of the acts, the delayed reporting of the acts, and the lack of overt visual evidence of corruption (e.g., Does anyone believe the majority of Americans understand why Alberto Gonzales was forced to resign?). When we see the aggregate of what Bush has done from 2000 to 2007, what emerges is a deliberate intent to increase the executive branch’s power at the expense of privacy, currency, and decency. As a result, the Supreme Court in the 1952 case, Youngstown Sheet and Tube Company v. Sawyer, 343 U.S. 579, seems prescient: “The doctrine of separation of powers was adopted by the Convention of 1787 not to promote efficiency but to preclude the exercise of arbitrary power. The purpose was, not to avoid friction, but by means of inevitable friction incident to the distribution of the governmental powers among three departments, to save the people from autocracy.” For example, Johnson talks about the importance of the FOIA (Freedom of Information Act). He then tells us how Bush attempted to subvert the intent of the law by signing Executive Order 13233 as well as charging non-profits $372,999 for simple requests (p. 247, 248). Unsurprisingly, John Ashcroft, who administered the executive branch’s wishes, ordered the Department of Justice, the agency charged with enforcing civil rights, to limit FOIA requests, stating, “When you carefully consider FOIA requests and decide to withhold records, in whole or in part, you can be assured that the Department of Justice will defend your decisions unless they lack a sound legal basis.” In other words, the federal government intentionally encouraged its employees to withhold information from the people by charging excessively for information or redacting vital information. Of course, had the requests been ambiguous and voluminous, such an order would be reasonable, and the citzenry would understand if the FOIA were limited. In a time of war, and with the billions spent on defense, one wonders why Congress does not also authorize a separate budget for FOIA requests. Johnson mentions later that “as of 2006, the overall cost of the wars in Iraq and Afghanistan since their inception stood at about $450 billion” (p. 276). Johnson also reveals that Congress raised the national debt limit from $8.2 trillion to $8.96 trillion in 2006 (p. 270). This is a precursor to Johnson’s most sensationalist line in the entire book: “The likelihood is that the United States will maintain a facade of constitutional government and drift along until financial bankruptcy overtakes it.” In related news, Bernanke lowered interest rates today. In response, the Swiss Franc increased 0.41% in just one day. In the last three months, it has appreciated almost 5% against the American dollar. The Euro increased 0.82% today. In the last three months, it has appreciated around 4% against the American dollar. Since January 2006, it has appreciated over 14% against the U.S. dollar. The U.S. currency is depreciating, making it easier for foreign interests to buy U.S. property and assets. A country that cannot control its currency places itself at the mercy of foreign interests. Eisenhower knew this, and once said, “[T]o support progress in our country, and indeed throughout the free world, we must make certain that there is no cheapening, no debasement of our currency” (Presidential Reflections, 1960). Johnson does not merely expose the Bush II administration’s follies. He also uses his background as a former CIA analyst to explore missile defense expenditures and satellite technology. We learn that we have spent around $92.5 billion and $130 billion on “the basic problem of shooting down an ICBM in flight...without even once...succeeded in doing so” (p. 230). He also makes the important point that we are spending massive amounts of money on controlling space and missile defense, but terrorists are more likely to use a cargo container on a transport ship, or an offshore vessel, or the mail to attack Americans (p. 231). My personal belief is that the L.A. and New York/New Jersey ports are the most likely targets of terrorists because of their economic importance and the general hubbub that makes it easy to be anonymous. Yet, rather than spend vast sums of money increasing protection of these ports, it appears that Congress is diverting funds to save military and defense jobs in their own districts. Johnson makes this point in the 2005 film, Why We Fight, which is a good prologue to his book. Perhaps the most intriguing parts of Johnson’s book are his analysis of SOFA and space. He talks about how the most mundane tasks now use satellites, from the card scanner at Walmart, which uses the information to track inventory, to the Garmin GPS system in cars, television broadcasting, and even atomic clocks. He says that Congress has referred to an enemy “jamming” a satellite’s capabilities as one reason to spend billions on space defense, but that a simple missile launching of debris into space would be sufficient to endanger satellite capabilities. In one of the most interesting parts of the book, he quotes Sally Ride, who said that a “speck of paint” had dented a part of the space shuttle (p. 217). Apparently, given the velocities and gravitational forces in space, tiny objects can have extremely powerful impacts (I knew that I would weigh more in certain parts of space, but I hadn’t connected this knowledge to debris damaging satellites). Ms. Fields’ writes, “[T]he analysis afterward showed that our window had been hit by an orbiting fleck of paint, and the relative velocities were enough that the paint actually made a small but visible gouge in the window.” She then goes on to say that as soon as you increase the junk in space, the more likely it is that junk will impact expensive satellites. (So much for dumping our waste in space in case we run out of landfills on Earth.) This is Johnson’s point–that the more things we send into space, the higher the likelihood of polluting space to the extent that our ability to maneuver there becomes impossible. See Primack, who says, “Weaponization of space would make the debris problem much worse, and even one war in space could encase the entire planet in a shell of whizzing debris that would thereafter make space near the Earth high hazardous for peaceful [space exploration] as well as military purposes” (p. 217). Again, Johnson seems to say that much of missile defense and space weaponry research is a boondoggle, to the tune of billions of dollars per year (the satellite expenditures cost $97.2 billion dollars in 2004, with the U.S. spending three-quarters of this amount) (p. 237). At the beginning of the book, Johnson stated, “It is a sad fact that the U.S. no longer manufactures much–with the exception of weaponry” (p. 5). Johnson also talks about SOFA and Japanese-American relations, which is his specialty. SOFAs are Status of Forces Agreements. They basically exempt American soldiers from international law. When such soldiers rape women and pollute local cities, they can return to the base, where they cannot be interrogated by local police. Johnson brings up this aspect of international relations to show American arrogance when dealing with other countries. The flip side of the coin is that American soldiers are in other countries to protect them and forcing consent to local laws would add an unnecessary layer of bureaucracy; however, when Johnson tells us that American soldiers in Okinawa are responsible for raping local women around once a month, including ten year old girls, the agreements seem to provide excessive immunity and be a moral hazard. What is interesting about this section is that Japan’s pacifism, enshrined in law under Article 9 after WWII, is apparently a fiction: “Japan, with 139 warships, now has the second most powerful navy on the planet. Its army, navy, and air force has a total of 239,000 officers and men, deploys 452 combat aircraft, and is financed by a budget roughly equal to China’s military expenditures” (p. 203). Japan, of course, needs oil from the Middle East to sustain its economy and also fears a rising China, which is still stinging from its treatment during WWII, and the Japanese failure to apologize for “comfort women.” (Even countries that strive for racial harmony, like Singapore, still have public exhibits showing how the Japanese tortured POWs and civilians.) Johnson does a terrific job of showing that American-Japanese policies seem to be headed towards an inevitable clash with China, which is angling for more international respect. While he is extremely harsh on U.S. policies, which are based on realpolitik, Johnson forces the reader to see the problems of being the world’s policeman. It is unlikely, for instance, that the Canadians and Swiss have similar problems as the U.S. Johnson indicates that there are two paths: one, be like the Roman Empire, refuse to give up the military bases (de facto territories) we have, and collapse; or two, be like the British, who eventually repudiated their empire and focused on domestic issues. Johnson’s other interesting point is that where the U.S. has intervened, we have made the countries worse off, relatively speaking. He mentions the Philippines, which is not doing as well as its neighbors in Southeast Asia who were not occupied by the U.S., such as Singapore, Vietnam, and Thailand. But Johnson’s analysis is debatable when it comes to other countries, such as Chile and Panama, and he conflates free markets with colonialism. Johnson is clearly anti-imperialist, so he does not give a balanced view. Joseph Nye’s words come to mind: “The biggest kid on the block always provokes a mixture of admiration and resentment.” In fact, Nye is the best counter-argument to Johnson. See Foreign Affairs, July 2003: “[T]he problem of creating an American empire might better be termed ‘imperial understretch.’ Neither the public nor Congress has proved willing to invest seriously in the instruments of nation building and governance, as opposed to military force. The entire allotment for the State Department and the U.S. Agency for International Development is only 1 percent of the federal budget. The United States spends nearly 16 times as much on its military, and there is little indication of change to come in this era of tax cuts and budget deficits. The U.S. military is designed for fighting rather than police work, and the Pentagon has cut back on training for peacekeeping operations.” More to the point, Nye points out that the defense expenditures for 2001 were only 3.2% of GDP. Even if they have increased to 5% of GDP after 2001, that is still a tiny percentage of GDP in exchange for ruling the world (healthcare costs, i.e. Medicare, Medicaid, may be 13% of GDP by 2060). The Roman Empire never had this kind of efficiency. Such efficiency brings us to the problem: perhaps it is so easy for the U.S. to dominate the world militarily that we can continue to be unilateral until a counterweight exists. But of course, we’ve been here before–it was called the Cold War, and it seemed unnecessary then, and it seems regressive now to return to that state of existence. Back to the book: Johnson spends the first half of it castigating the Bush administration, with gems such as this: “Secretary Rumsfeld[!] noted that international law allowed the use of force only to prevent future attacks and not for retribution...’No,’ the President yelled....‘I don’t care what the international lawyers say, we are going to kick some ass’” (p. 34). Later, Bush is shown ordering the New York Times to hold off on a story relating to FISA and warrant-less wiretapping in the name of “national security” (p. 255). The bastion of liberal news, the New York Times, actually went along with Bush and did not print the story until a year later, which caused a FISA court judge to voluntarily resign in protest (p. 255). Bush seems to provoke this reaction in many people: Judge J. Michael Luttig also resigned after being lied to by the Bush administration. Yet, with all of these facts laid bare, Americans aren’t crying out for impeachment or blood as our founders might have. The economist in me seems convinced that as long as the people are making money, they won’t care about external events. Most frightening of all, perhaps the current state of affairs can continue for another 100 years, because the weakening of the American dollar won’t be noticeable until many more Americans travel internationally, and most Americans won’t be traveling to Tokyo or London anytime soon. Even if Chinese products increase in price, there will be a Cambodia or African country to take its place, guaranteeing cheaper prices for years to come, and masking the decline of American primacy. As long as the American consumer is the master of the economic machine, perhaps current affairs will remain in its uneasy, simmering stasis.

Friday, August 31, 2007

Capitalism and Freedom, by Milton Friedman

Milton Friedman's Capitalism and Freedom packs so much wisdom in such concise language, I felt like my IQ rose 50 points after just four hours of reading. Mr. Friedman is a polarizing figure. His views on some subjects, such as eliminating Social Security and legalizing drugs and prostitution, are radical; however, Friedman makes the underlying rationale behind these proposals seem bulletproof when he explains their libertarian foundation. Some passages show the inherent reasonableness of his arguments:

"Freedom to advocate unpopular causes does not require that such advocacy be without cost. On the contrary, no society could be stable if advocacy of radical change were costless, much less subsidized...Indeed, it is important to preserve freedom only to people who are willing to practice self-denial, for otherwise freedom degenerates into license and irresponsibility... Freedom is a tenable objective only for responsible individuals."

Friedman's main motif is that freedom requires self-evaluation and self-policing, which is preferable to government interference. The alternative, state-sanctioned coercion, necessarily leads to less freedom--a theme Friedman patiently hammers into the reader.

If there is a flaw in Friedman's analysis, it is the missing link of how to prevent citizens with less self-control or citizens who are more susceptible to temptation from interfering with other, more reasonable citizens. Friedman may answer that this is where government is useful. He writes, "The existence of a free market does not of course eliminate the need for government. On the contrary, government is essential both as a forum for determining the 'rules of the game' and as an umpire to interpret and enforce the rules decided on."

Although government is a necessity, Mr. Friedman wants readers to ask, "How much government is necessary," and "What form should government take"?:

"Political freedom means the absence of coercion of a man by his fellow men. The fundamental threat to freedom is power to coerce, be it in the hands of a monarch, a dictator, an oligarchy, or a momentary majority. The preservation of freedom requires the elimination of such concentration of power to the fullest possible extent and the dispersal and distribution of whatever power cannot be eliminated--a system of checks and balances."

Thus, Friedman escapes any contradiction by making the point that while government is necessary, it is necessary only in the most minimalist form possible. Friedman also promulgates several broad principles to support his philosophical framework, namely,

1. The scope of government must be limited.
2. Government power must be dispersed.
3. "The power to do good is also the power to harm; those who control the power today may not tomorrow; and, more important, what one man regards as good, another may regard as harm."

The last principle is stunning in its beautiful, simple logic, and there are gems like this on almost every page.

Friedman's other point is that the "great advances of civilization...have never come from centralized government. " FDR's New Deal is one counterargument, but Friedman indirectly addresses this potential hole by stating that the Depression was a unique instance in history that could have and should have been avoided: "The Great Depression in the United States, far from being a sign of the inherent instability of the private enterprise system[,] is a testament to how much harm can be done by mistakes on the part of a few men [i.e., the Federal Reserve] when they wield vast power over the monetary system of a country." Friedman says that had the Fed provided money to the banking system through its discount window, the Great Depression might have been avoided. (It is interesting to note that Bernanke, in the face of widespread economic fear, recently opened the discount window to banks, which is an interesting development, because he is known in academic circles as favoring inflation targeting.)

Perhaps Friedman's most salient point is that we forget the short history of mankind's relative affluence. He states, "Because we live in a largely free society, we tend to forget how limited is the span of time and the part of the globe for which there has ever been anything like political freedom: the typical state of mankind is tyranny, servitude, and misery." In other words, there is no such thing as a free lunch, and freedom is a goal worth striving for.

I will leave you with an interesting passage that is relevant to the recent subprime mortgage mess in the markets and the lack of financial liquidity:

"The result [of the banks lending money and keeping only 15 to 20 cents of each dollar deposit] is that for every dollar of cash owned by banks, they owe several dollars of deposits. [Thus,] any widespread attempt on the part of depositors to 'get their money' must therefore mean a decline in the total amount of money unless there is some way in which additional cash can be created and some way for banks to get it. Otherwise, one bank, in trying to satisfy its depositors, will put pressure on other banks by calling loans or selling investments or withdrawing its deposits and these other banks in turn will put pressure on still others. This vicious cycle, if allowed to proceed, grows on itself as the attempt of banks to get cash forces down the prices of securities, renders banks insolvent that would otherwise been entirely sound, shakes the confidence of depositors, and starts the cycle over again."

It looks like Bernanke made the right decision, at least in the short term, by opening the discount window. If, however, he lowers interest rates in September, his reputation as an inflation targeter may not be deserved.

In any case, read Capitalism and Freedom. It's an incredible education to be had, and in just 202 pages. I recommend the 40th Anniversary edition, with the year 2002 introduction by Friedman.

Note: the picture above is of Mr. Friedman's son and myself at Santa Clara Law School.

Tuesday, August 7, 2007

Book Review: Niall Ferguson's The Cash Nexus

[Note: this post was written and published on June 14, 2012 but has been backdated.]

I just finished Niall Ferguson’s tome, The Cash Nexus (2001) (paperback, by Basic Books).  It took me a long time to get through it, and I still think The Ascent of Money is a much better book, but I wanted to share some tidbits:

1.  For whatever reason, the engineers I know don’t tend to be great investors.  So I wasn’t overly surprised to learn that Sir Isaac Newton, the genius of his time, failed at investing, buying at the peak and selling at the low—of a bubble, no less.  However, I was surprised to read that Karl Marx, of all people, was a daytrader or short-term trader.  He wrote his socialist friend, Ferdinand Lassalle, in 1862 about his market-timing skills:

I have, which will surprise you not a little, been speculating--partly in American funds, but more especially in English stocks, which are springing up like mushrooms this year (in furtherance of every imaginable and unimaginable joint stock enterprise) are forced up to a quite an unreasonable level and then, for most part, collapse. In this way, I have made over £400 and, now that the complexity of the political situation affords greater scope, I shall begin all over again. It’s a type of operation that makes small demands on one’s time, and it’s worth while running some risk in order to relieve the enemy of his money.   [page 319]

2.  Ferguson seems to have predicted the collapse or at least the instability of the present-day EU.  He points out that many historians believe that a “homogeneous nation-state was the only proper setting for a liberal polity” and then describes Europe's ethnic and linguistic diversity, especially in Central and Eastern Europe. [page 378 and 379]

Earlier in the book, he referred to a Freedom House survey that "suggests that countries without a predominant ethnic majority are less successful in establishing open and democratic societies than ethnically homogeneous countries (defined as countries in which over two-thirds of the population belong to a single ethnic group).  Of the 114 countries in the world which possess a dominant ethnic group, 66--more than half--are free.  By contrast, among multi-ethnic countries only 22 of 77 are free--less than a third." [pages 375-376]

Personally, I think the EU's current instability owes more to the lack of a single dominant language and differing corruption and tax enforcement levels (e.g., efficient Germany vs. corrupt Greece) than any ethnic differences.  Also, Ferguson is highlighting a survey with a 57.8% to 28.6% numerical difference--which is perhaps not statistically significant unless one examines the survey's definition of "ethnic" and the time periods involved (which could be either too limited or too broad).  In any case, Ferguson does not elaborate much on the survey's methods or underlying data.  

3.  Ferguson states that the Germans were the “worst offenders” in terms of ethnic conflict and forced resettlement: “In addition to murdering between five and six million Jews, their racial policies were responsible for the deaths of around three million Ukrainians, 2.4 million Poles, 1.6 million Russians, 1.4 million Belorussians and a quarter of a million gypsies.” [page 380]

4.  On state monopolies in relation to commodities: “Around 5 percent of American state and local government revenue comes from state utilities and liquor stores.  State lotteries play a similar role: in each case the state monopolizes the gratification of a particular vice…And like the vices themselves, the revenues they generate can be hard to give up.” [page 55]

5.  For the gold bugs: most gold is used for jewelry, and India consumes 700 tons of gold annually (at least per 2001 data).  Ferguson also includes this interesting note: "It should be emphasized that, contrary to popular belief, gold has been a poor hedge against inflation in Britain and the United States.  The purchasing power of gold has actually increased more in periods of deflation like the 1880s and 1930s; whereas during war-induced inflations it has lost ground relative to industrial commodities needed for military purposes.  The real attraction of gold is that it is accessible and exchangeable even when established monetary institutions fail."  [page 325]

Ferguson relies on The Changing Relationship Between Gold and the Money Supply, by Michael D. Bordo and Anna J. Schwartz, and Gold as a Store of Value by Stephen Harmston.  

6.  On the increasing size of government: “In 1891 total government personnel amounted to less than 2 per cent of the total labor force in Britain.  The figures on the continent were higher, but not by much.  For Italy in 1871 the equivalent was just 2.6 per cent; for Germany in 1881 3.7 per cent.  Even the famously elaborate Habsburg bureaucracy was small in relation to the swelling population of the Empire. But from the turn of the century onwards there was sustained growth in the public sector almost everywhere.  By the 1920s public employment exceeded 5 per cent of the workforce in Italy, 6 per cent in Britain and 8 percent in Germany.  [pages 90 and 91]

According to the United States Census Bureau, in 2010, state and local governments had 16.6 million full time employees.  (See here.)  The federal government had about 3 million total employees, with 2.583 million having full time jobs.  These federal numbers apparently do not include the 185,295 employees within the Department of Homeland Security.  (See here.)  Taken together, the aforementioned numbers indicate that we had about 19,368,295 full time government employees in 2010.  In 2010, the U.S. Census Bureau indicated that the resident population of the United States on April 1, 2010 was 308,745,538.  These figures indicate that in 2010, total government personnel in the United States was about 6.27% of the total resident population.  

7.  Some general facts: 

“At the time of [Bill] Clinton’s inauguration, more than 13 per cent of US federal government bonds were in foreign hands.” [page 263] 

Ferguson seems to have predicted the 2008 financial collapse when he wrote the following in 2001: 

“And the growth of international derivatives markets has been even more rapid.  The total amount of futures and options instruments traded on exchanges rose from $7.8 trillion at the end of 1993 to $13.5 trillion at the end of 1998.  The amount of so-called 'over-the-counter' (OTC) instruments traded outside established exchanges rose from $8.5 trillion to an astonishing $51 trillion.  The OTC derivatives market is now by any measure the biggest financial market in the world—more ‘terrifying’ even than the $34 trillion bond market.” [page 263] 

Monday, August 6, 2007

West by West: My Charmed, Tormented Life

[This post was published on October 26, 2011 but backdated.]

Jerry West's autobiography showcases a man of pure class and professionalism.  I've summarized parts of the book I found most interesting below. 

West grew up poor in West Virginia, the fifth of six children. He had a distant mother plagued by her husband's infidelity and a father who was abusive towards West and his siblings. West writes that his dislike of authority figures probably comes from his father. At the same time, West has a non-confrontational personality due to his shyness.

Jack Nicholson describes West as "fierce, frank, but very fragile."

West suffers from depression and atrial fibrillation. He takes Coumadin and Xanax for the atrial fibrillation and Prozac for the depression.

Two interesting quotes: "The coal industry and its lobbyists have run West Virginia for years, and it depresses me that education is not the first priority." (page 28)

"I have a coal -mining, company-store mentality, born out of the state we both grew up in: that if you are doing well, the company will reward you. But there's no point in asking because it would be un-Southern and ungracious, and besides, they have all the power anyway."

West voted for Obama. West dislikes Jesse Jackson. His hero is James Brown, who also wore #44.

Cooke, the Lakers' owner before Buss, was apparently a pompous arse. One example: he called John Wooden to his home to ask him to coach the Lakers, even though Wooden had insisted beforehand he would not leave UCLA. Nevertheless, Cooke wrote a number on a piece of paper and slid it over to Wooden. Wooden looked at it and said, "No coach is worth this amount of money." Cooke immediately told Wooden to get out of his house. 

West pulled a "Barry Bonds"--he surprised his second wife with a prenup shortly before the wedding day, primarily because his first marriage (he married too young) had ended badly and expensively. He is still married to his second wife, Karen.

West on Kobe Bryant, the player he recruited, with the help of Arn Tellum: "Kobe was young and immature. He had a showboat style and a bottomless reservoir of drive that fueled him; he wasn't content just to beat people, he had to embarrass them, even players on his own team."

Although West views himself as a father figure to Kobe, Kobe chose not to participate in the book, unlike Kareem, Pat Riley, etc.

West thinks that Kobe was "set up" by the woman in Colorado who accused him of rape. When the incident occurred, Kobe sought out West for advice, even though West was working for Memphis at the time.

Phil Jackson told Jerry to get the eff out of the locker room after a game. No one had ever told Jerry to get out of the Lakers locker room before, and that incident strained an already tense relationship. When Phil first joined the Lakers, West felt that Phil deliberately ignored him.  Jackson apparently wouldn't even say hello as he walked by West's office.

Basically, Phil had already won six championships when he joined the Lakers, had just come from a situation in Chicago where he and the GM had clashed, and had no need for West's advice or input. As Mitch Kupchak says, "Phil didn't need Jerry's advice and wouldn't have wanted it anyway."

At the end of the day, West didn't leave the Lakers solely because of Phil--there were many reasons, including Buss's increasing separation from the team once they moved to Staples Center, as well as Glen Rice's back-handed salary negotiations.

West praises Kurt Rambis both in personal and professional terms. He also says that Kurt was responsible for the Showtime Lakers' success because of the quick way he would collect the ball, get out of bounds with one leg, and pass the ball to Magic to start the fast break. Magic agrees.

West participated in a strike where the players were demanding a pension plan. They succeeded.

West believes that the expansion of the NBA roster from 10 (the limit during his time) to 15 players allows non-NBA-caliber players to join the league.  These days, West says the additional three to five players basically serve as practice players, i.e., players who are primarily utilized to challenge teammates during practice.  He seems to say that we should either reduce the roster size or the number of teams.  He believes the higher number of teams harms the ability of small market teams to compete against larger market teams.  Ironically, West indicates that Pat Riley--whose work ethic was exceptional--may have been in the category of a practice player.  Given Riley's success as a coach, one wonders whether a modern-day version of a Pat Riley would still be able to get his start in the NBA today, especially if it had smaller rosters or fewer teams.

Some final notes: 1) Jerry's brother, David, died in the Korean War when Jerry was a boy. David was apparently the family's favorite. David's death probably gave Jerry a kind of survivor's guilt, which, coupled with his abusive father, led to his depression; 2) despite being asked to contribute some thoughts to the book, Kobe did not do so, which "shocked" West; 3) West continues to be plagued by the six times the Celtics beat his Lakers in the Finals, even though West won the championship in 1972; his Lakers team continues to hold the longest active winning streak in professional sports (33 games); and he won a gold medal in 1960, his most prized possession); 4) West claims he didn't give away Pau Gasol to the Lakers out of favoritism but because the owner of the Grizzlies wanted to save money; 5) one of the pictures in the book is of Riley with a mustache--it's hilarious; and 6) at the end of the book, West included a touching comment to his wife of "33 years (and counting)": "It has not always been smooth, I know that, but I am grateful that you stayed in the game."

Mr. West, on behalf of NBA fans everywhere, thank you for "staying in the game." 

© Matthew Rafat (2011)

Sunday, August 5, 2007

Book Review: The Persia Cafe, by Melany Neilson

Ever since attempting Faulkner, I've always had a strange relationship with Southern literature. It's exasperating to read about the South and the thinking that inspired George Wallace (who was actually far more interesting than his infamous chant of "segregation today, segregation tomorrow, segregation forever" would indicate). Coming from California--mentioned in the book as a place to get away from constrictive social mores--reading about the Southern mentality before President Johnson and the Civil Rights Act seems foreign. But happy "normalcy" creates the same dullness, as Tolstoy might have said; indeed, perhaps the South has produced its outsized share of writers because of the turbulence caused by the civil rights movement, and the weight of history upon the Southern damp soil.

If Faulkner were a woman who could cook and wanted to write Mississippi Burning, The Persia Cafe might have been the result. Food is the motif that emanates throughout the book, placing its protagonist, a cafe owner, Fanny Leary, right on the DMZ of the racial divide. Of course, the notion of food separating people rather than bringing them together shows the reader the type of town that is Persia, Mississippi. Some passages are absolutely golden:

"You have to say this about the cafe: Smells curtained the place. Odors from one room climbed to another. Cinnamon. Frying bacon. Blackberry cobbler, serene as ink. There was a smell in our sheets like bread dough. There were nights when moonlight spilling along the river and through the window gave the wallpaper dimension."

Right away, we learn that Fannie Leary isn't your typical Southerner:

"I for one had often thanked the Lord that I did not have to listen to Brother Works's sermons as long as there was a pot of coffee and a pillowed bed, a newspaper, the loose-sheeted freedom of a Sunday morning. "

However, in the middle of the novel, some Southern soap opera makes its appearance, bogging down the novel. The beginning of The Persia Cafe is interesting, as we are getting to know the characters; the ending, absolutely enthralling, as the plot slowly unfolds; but the middle seems like one story too much as it focuses on Fanny's alcoholic husband, a Southern stereotype diluting the novel's interesting prose and plot. Still, some passages are too good not to share:

"So this too was Will. Pacing there, I had what I thought was a refreshing perspective and saw that the boy I had married had not been true and fine but just a boy. I saw that he had not been mine but merely near, and though he had taken me in his arms he had not fallen for me, but had merely felt that mysterious jolt in the pulse."

Still, as soap operas go, that's not a bad piece. And again, I take you back to food to show you that the author never loses her touch for too long:

"I hung up. It rang again. I picked up and hollered, 'What the hell you want?' A listening silence, then click, the dial tone, a long hollow blowsy tunnel, spit and crackle, like frying eggs."

The following passage also integrates food with cats, a neat feat: "their nostrils sniffing the meaty air...soft paws scurried, tiny white fangs tore at bones, backs arched and tails batoned and fur rose and brushed my ankles, making electric shocks."

But the real sadness of the South is that one never truly knows one's neighbor because of the secrets and lies buried with the strange fruit Billie Holiday sang about. Laws and social mores that constrict human interaction prevent possibilities, and this is where the novel enters a more sophisticated realm:

"And I was still mad at her for being black and being my friend, two things that together she was never supposed to have been."

"Well I had not known. I had not known; how could I in this town where it seemed you could never really know another person? I was alone in the world, in a way that made me feel the dryness in my mouth and the deep ache in my breathing, and the darkness rising through the room, like smoke."

There are two sides to this loneliness. From one perspective, loneliness is good, at least where injustice is concerned--better to be alone than complicit in the company of apathy. Thus, the reader will empathize with Fanny, but also wonder why the situation arose in the first place. Looking around, especially in California, Mississippi just forty five(!) years ago seems like another planet. Southern novels seem strange to many readers because they chronicle a bygone era. The key is to remember that this tension did actually exist once upon a time. Without suspending modern day notions, Southern novels make no sense, and we should be glad that reality has to be pushed aside to let Southern literature into our lives.

Still, no Southern novel would be complete without some reference to the thick swampy climate, and I will leave you with that weight:

"I didn't find much to say to that. So I continued to sit there for quite a while, holding Mattie's hand, which she seemed to want, and looking out into the night, which coiled dampsweet and thick toward the river, in the direction of the cafe."

© Matthew Rafat (2007) 

Tuesday, July 24, 2007

Plus ça change, plus c'est la même chose, Part II: Theodore Roosevelt's New Nationalism

Theodore Roosevelt may have been the last down to earth, gritty politician America's had. Two of his speeches are classic, and it's interesting how a person can be so close-minded and yet so astute at the same time. Links to the speeches are below, but you can also do an online search for Roosevelt, The New Nationalism (August 31, 1910) and Expansion of the White Races (January 18, 1909). I am including a portion of the New Nationalism speech below as part of my ongoing series exploring how history repeats itself.

(general link)

"Now, this means that our government, national and State, must be freed from the sinister influence or control of special interests. Exactly as the special interests of cotton and slavery threatened our political integrity before the Civil War, so now the great special business interests too often control and corrupt the men and methods of government for their own profit. We must drive the special interests out of politics. That is one of our tasks to-day. Every special interest is entitled to justice - full, fair, and complete - and, now, mind you, if there were any attempt by mob-violence to plunder and work harm to the special interest, whatever it may be, and I most dislike and the wealthy man, whomsoever he may be, for whom I have the greatest contempt, I would fight for him, and you would if you were worth your salt. He should have justice. For every special interest is entitled to justice, but not one is entitled to a vote in Congress, to a voice on the bench, or to representation in any public office. The Constitution guarantees protections to property, and we must make that promise good But it does not give the right of suffrage to any corporation. The true friend of property, the true conservative, is he who insists that property shall be the servant and not the master of the commonwealth; who insists that the creature of man's making shall be the servant and not the master of the man who made it. The citizens of the United States must effectively control the mighty commercial forces which they have themselves called into being.

There can be no effective control of corporations while their political activity remains. To put an end to it will be neither a short nor an easy task, but it can be done. We must have complete and effective publicity of corporate affairs, so that people may know beyond peradventure whether the corporations obey the law and whether their management entitles them to the confidence of the public. It is necessary that laws should be passed to prohibit the use of corporate funds directly or indirectly for political purposes; it is still more necessary that such laws should be thoroughly enforced. Corporate expenditures for political purposes, and especially such expenditures by public-service corporations, have supplied one of the principal sources of corruption in our political affairs...

Those who oppose all reform will do well to remember that ruin in its worst form is inevitable if our national life brings us nothing better than swollen fortunes for the few and the triumph in both politics and business of a sordid and selfish materialism.

If our political institutions were perfect, they would absolutely prevent the political domination of money in any part of our affairs. We need to make our political representatives more quickly and sensitively responsive to the people whose servants they are. More direct action by the people in their own affairs under proper safeguards is vitally necessary...

So it is in our civil life. No matter how honest and decent we are in our private lives, if we do not have the right kind of law and the right kind of administration of the law, we cannot go forward as a nation. That is imperative; but it must be an addition to, and not a substitution for, the qualities that make us good citizens...You must have that, and, then, in addition, you must have the kind of law and the kind of administration of the law which will give to those qualities in the private citizen the best possible chance for development. The prime problem of our nation is to get the right type of good citizenship, and, to get it, we must have progress, and our public men must be genuinely progressive."

Wednesday, July 11, 2007

Angels, Demons, and Lawyers

I've sometimes contemplated writing a novel. This could be the first chapter, which I started last year:

The 20th century killed the romantic. Capitalism vanquished socialism and then proceeded to elevate the twin values of starvation and survival. It didn't matter if it was real starvation, the kind that took place in Africa, what Robert Kennedy saw in the South--or high-class starvation, the kind that newly laid-off fathers with families understood. Choosing survival, the men in the modern world, tempted by luxuries of beauty and bare bellybuttons, reached back into Biblical times and remembered the fable of the apple. Women, not happy with being demonized, decided to either cut down the tree or plant their own gardens, further confusing Adam’s progeny.

Meanwhile, modern men branched out into three realms: one, the creature that refused to conform, saw political correctness as an affront to his being, spawned The Man Show and the Coors Twins; two, the blessed kind, that saw equality and self-control as either entitlements to Beemers or, perhaps more appropriately, to responsibility; and three, the other, the nerd in the corner, never popular in high school, now older, taller, appealing, but the holder of the modern apple of fear–scared of commitment, of falling behind, of starving and of losing the motivator of starvation. It was the last camp that Rustem Mahdy fell in, and his stomach rumbled as he took the elevator to the sixth floor of the law firm, where he played an attorney, propping up partners with wizened faces and dusty knowledge. He had contemplated stopping on the second floor to flirt with the office manager of a process service firm but decided against it. It was too early, and besides, work had to be done.

Women, of course, defied any easy description, but branched generally into several camps: the kind with strong, loving fathers (who of course had strong, loving mothers) and either chose to emulate their fathers professionally, or, having been given faith in man, gained the knowledge of how to identify men who would not let them down. Flannery O'Connor aside, it would be one of the surprising features of the modern world that the women who could identify a good man, even if lacking all other skills, would somehow be better off in terms of love. In the third camp were women who knew they were not as smart as the men they wanted, or as attractive as the women men wanted, and decided to gain security through the unifying force God had given all women. It was an interesting trade-off, and those women--once married--did seem to be quite happy. There was another camp, slowly dwindling in numbers, of women who had spent their lives raising children, ironing and cleaning, only to see Proctor and Gamble and the microwave culture passing them too quickly to give thanks (or even their condolences).

But Michelle Mosi, Esq. wasn't wondering what camp she was in. Born and raised in the Midwest, she was too practical for those kinds of questions and was more intent on getting opposing counsel to submit to her very reasonable demand of scheduling an independent medical exam in September rather than October. "It's all so simple," she thought to herself--"just get Plaintiff to the the exam, and I'll make my billables and keep the client happy. " Love-wise, Michelle was married with a reasonably-sized diamond ring--it wasn't a Tacori, but at least it was from Borsheim's. Michelle stopped looking at her ring and re-focused her attention on work. "Left Message for Client re: IME, 0.2."

This was the new world that God had to play with, and He wondered how to manage marriage and love in a culture suspicious of sacrifice and unused to thinking in terms of centuries rather than seconds. The Devil cackled, egging on his right-hand man, Materialism, and informed him of the pullback. The news from the front came soon enough: Cupid had been shot and was D.O.A.

God, never one to appreciate losing a round, sent one of his most trusted angels, Bryan Gabriel, back to America to assess the damage and to help restore faith. Gabriel, after surveying how he could be most effective, decided to apply for a law firm emphasizing employment law. If it didn’t work out, Gabriel thought, he could always become an investment banker and hear what this Soros character had to say. Gabriel decided to set up an office on the second floor of a tall commercial building in downtown San Jose. There was work to be done, and not a second to lose.

[In later chapters, Milton Black aka the Devil, will send down a man named Mark Lusy, who will apply for and be accepted at a law firm called Nicholson, Lytler, and Reese.]

Tuesday, July 10, 2007

Music Lyrics 1

While Supertramp’s less eloquent song, "Take a Look at My Girlfriend" is more mellifluous, the lyrics for "The Logical Song" are classic, and if you want to see a timely satire, google Barron Knights and The Topical Song. I thought I'd share this one, in case anyone's forgotten the song and/or the lyrics. My favorite line is, "Now watch what you say or they’ll be calling you a radical."

Someone should call Bob Dylan, because we need better lyrics in today's music scene. Without the rock n' rollers, modern music no longer seems to fill in the role of counter-culture. The younger generation used to function as a counterweight to war, and in doing so, promoted idealism. Today, with many of the largest media outlets in the hands of shareholders, whose job is to maximize profits, and much of the younger generation in debt, it will be interesting to see where new societal counterweights come from.

The Logical Song, by Supertramp

When I was young, it seemed that life was so wonderful,
A miracle, oh it was beautiful, magical
And all the birds in the trees, well they’d be singing so happily,
Joyfully, playfully watching me.
But then they sent me away to teach me how to be sensible,
Logical, responsible, practical.
And they showed me a world where I could be so dependable,
Clinical, intellectual, cynical.

There are times when all the world’s asleep,
The questions run too deep
For such a simple man.
Won’t you please, please tell me what we’ve learned
I know it sounds absurd
But please tell me who I am.

Now watch what you say or they’ll be calling you a radical,
Liberal, fanatical, criminal.
Won’t you sign up your name, we’d like to feel you’re
Acceptable, respectable, presentable, a vegetable.

At night, when all the world’s asleep,
The questions run so deep
For such a simple man.
Won’t you please, please tell me what we’ve learned
I know it sounds absurd
But please tell me who I am.

Wednesday, July 4, 2007

Plus ça change, plus c'est la même chose

First in an occasional series. I will be posting links to speeches that remind us that the more things change, the more they stay the same. See, for example, President Sukarno of Indonesia: Speech at the Opening of the Bandung Conference, April 18 1955:

This twentieth century has been a period of terrific dynamism. Perhaps the last fifty years have seen more developments and more material progress than the previous five hundred years. Man has learned to control many of the scourges which once threatened him. He has learned to consume distance. He has learned to project his voice and his picture across oceans and continents. lie has probed deep into the secrets of nature and learned how to make the desert bloom and the plants of the earth increase their bounty. He has learned how to release the immense forces locked in the smallest particles of matter.

But has man's political skill marched hand-in-hand with his technical and scientific skill? Man can chain lightning to his command-can be control the society in which be lives? The answer is No! The political skill of man has been far outstripped by technical skill, and what lie has made he cannot be sure of controlling.

The result of this is fear. And man gasps for safety and morality.

Perhaps now more than at any other moment in the history of the world, society, government and statesmanship need to be based upon the highest code of morality and ethics. And in political terms, what is the highest code of morality? It is the subordination of everything to the well-being of mankind. But today we are faced with a situation where the well-being of mankind is not always the primary consideration. Many who are in places of high power think, rather, of controlling the world.

Yes, we are living in a world of fear. The life of man today is corroded and made bitter by fear. Fear of the future, fear of the hydrogen bomb, fear of ideologies. Perhaps this fear is a greater danger than the danger itself, because it is fear which drives men to act foolishly, to act thoughtlessly, to act dangerously. . . .

All of us, I am certain, are united by more important things than those which superficially divide us. We are united, for instance, by a common detestation of colonialism in whatever form it appears. We are united by a common detestation of racialism. And we are united by a common determination to preserve and stabilise peace in the world. . . .

We are often told "Colonialism is dead." Let us not be deceived or even soothed by that. 1 say to you, colonialism is not yet dead. How can we say it is dead, so long as vast areas of Asia and Africa are unfree.

And, I beg of you do not think of colonialism only in the classic form which we of Indonesia, and our brothers in different parts of Asia and Africa, knew. Colonialism has also its modern dress, in the form of economic control, intellectual control, actual physical control by a small but alien community within a nation. It is a skillful and determined enemy, and it appears in many guises. It does not give up its loot easily. Wherever, whenever and however it appears, colonialism is an evil thing, and one which must be eradicated from the earth. . . .

Not so very long ago we argued that peace was necessary for us because an outbreak of fighting in our part of the world would imperil our precious independence, so recently won at such great cost.

Today, the picture is more black. War would riot only mean a threat to our independence, it may mean the end of civilisation and even of human life. There is a force loose in the world whose potentiality for evil no man truly knows. Even in practice and rehearsal for war the effects may well be building up into something of unknown horror.

Not so long ago it was possible to take some little comfort from the idea that the clash, if it came, could perhaps be settled by what were called "conventional weapons "-bombs, tanks, cannon and men. Today that little grain of comfort is denied us for it has been made clear that the weapons of ultimate horror will certainly be used, and the military planning of nations is on that basis. The unconventional has become the conventional, and who knows what other examples of misguided and diabolical scientific skill have been discovered as a plague on humanity.

And do not think that the oceans and the seas will protect us. The food that we cat, the water that we drink, yes, even the very air that we breathe can be contaminated by poisons originating from thousands of miles away. And it could be that, even if we ourselves escaped lightly, the unborn generations of our children would bear on their distorted bodies the marks of our failure to control the forces which have been released on the world.

No task is more urgent than that of preserving peace. Without peace our independence means little. The rehabilitation and upbuilding of our countries will have little meaning. Our revolutions will not be allowed to run their course. . . .

What can we do? We can do much! We can inject the voice of reason into world affairs. We can mobilise all the spiritual, all the moral, all the political strength of Asia and Africa on the side of peace. Yes, we! We, the peoples of Asia and Africa, 1,400,000,000 strong, far more than half the human population of the world, we can mobilise what I have called the Moral Violence of Nations in favour of peace. We can demonstrate to the minority of the world which lives on the other continents that we, the majority are for peace, not for war, and that whatever strength we have will always be thrown on to the side of peace.

In this struggle, some success has already been scored. I think it is generally recognised that the activity of the Prime Ministers of the Sponsoring Countries which invited you here had a not unimportant role to play in ending the fighting in Indo-China.

Look, the peoples of Asia raised their voices, and the world listened. It was no small victory and no negligible precedent! The five Prime Ministers did not make threats. They issued no ultimatum, they mobilised no troops. Instead they consulted together, discussed the issues, pooled their ideas, added together their individual political skills and came forward with sound and reasoned suggestions which formed the basis for a settlement of the long struggle in Indo-China.

I have often since then asked myself why these five were successful when others, with long records of diplomacy, were unsuccessful, and, in fact, had allowed a bad situation to get worse, so that there was a danger of the conflict spreading. . . . I think that the answer really lies in the fact that those five Prime Ministers brought a fresh approach to bear on the problem. They were not seeking advantage for their own countries. They had no axe of power-politics to grind. They had but one interest-how to end the fighting in such a way that the chances of continuing peace and stability were enhanced. . . .

So, let this Asian-African Conference be a great success! Make the "Live and let live" principle and the "Unity in Diversity" motto the unifying force which brings us all together-to seek in friendly, uninhibited discussion, ways and means by which each of us can live his own life, and let others live their own lives, in their own way, in harmony, and in peace.

If we succeed in doing so, the effect of it for the freedom, independence and the welfare of man will be great on the world at large. The Light of Understanding has again been lit, the Pillar of Cooperation again erected. The likelihood of success of this Conference is proved already by the very presence of you all here today. It is for us to give it strength, to give it the power of inspiration-to spread its message all over the World.

Friday, June 29, 2007

Seattle Desegregation?

The U.S. Supreme Court handed down the decision in Parents Involved in Community Schools v. Seattle School District No. 1 yesterday. In what will be quoted forevermore, Chief Justice Roberts wrote, "The way to stop discrimination on the basis of race is to stop discriminating on the basis of race." Justice Breyer called the opinion simplistic. Justice Stevens, as the most tenured judge on the Court, stated that the Court is radically changing precedent because the Supreme Court justices in the past would have disagreed with the Seattle decision ("It is my firm conviction that no Member of the Court that I joined in 1975 would have agreed with today’s decision.").

When reading the majority opinion, I was struck by how much enmity Justice Roberts has created between the justices despite his pledge to unite the Court and create more civility. After writing for the majority, Roberts then blazed through Justice Breyer's dissent and dissected it like a law clerk attacking another lawyer's brief--or, to be more colorful, Sherman going through Atlanta. In contrast, Justice Kennedy, as the fifth vote necessary to have a majority, appeared to distance himself from Roberts in various sections in a separate concurrence. Justice Thomas also seemed to go out of his way to be respectful to Justice Breyer, saying that while he has no doubt Breyer's intentions are good, the law must remain as immutable as possible rather than being contingent on a particular judge applying the law.

In short, Roberts stated that there had to be a compelling reason to use race. For law students, this is Con Law 101, i.e. the strict scrutiny test. Kennedy appeared to try to compromise by saying that diversity was a compelling goal, and other methods could be used to create diversity, such as locating new schools in neighborhoods that would naturally draw upon different races (although one wonders how this would be accomplished if some neighborhoods are already segregated--I predict a future opinion echoing O'Connor's disdain for gerrymandering, where she famously called some of the Congressional districts similar to a Rorschach test or a "bug splattered on a windshield.") Breyer essentially stated that the Court is betraying precedent and twisting the intent and spirit of Brown v. Board of Education.

The opinion is most intelligent when differentiating between de jure segregation and de facto segregation. The conservatives seem to say that de facto segregation is permissible. The paragraph that seems to lay the best rationale for the decision is directly below:

"The Court’s emphasis on‘benign racial classifications’ suggests confidence in its ability to distinguish good from harmful governmental uses of racial criteria. History should teach greater humility. . . . ‘[B]enign’ carries with it no independent meaning, but reflects only acceptance of the current generation’s conclusion that a politically acceptable burden, imposed on particular citizens on the basis of race, is reasonable.” Metro Broadcasting, 497 U. S., at 609–610 (O’Connor, J., dissenting). See also Adarand, supra, at 226 (“‘[I]t may not always be clear that a so-called preference is in fact benign’” (quoting Bakke, supra, at 298 (opinion of Powell, J.))). Accepting JUSTICE BREYER’s approach would “do no more than move us from ‘separate but equal’ to ‘unequal but benign.’” Metro Broadcasting, supra, at 638 (KENNEDY, J., dissenting)."

One interesting point made in the dissent is that the school plans in question here are voluntarily attempting to desegregate. Breyer indicates that voluntary plans to achieve desegregation should be viewed with a different lens than laws involuntarily ordering segregation, as was the issue in Brown v. Board.

(Ironically, this same month, the U.S. Mint produced one of the most beautiful coins ever made. It is a silver coin depicting the Little Rock Central High School Desegregation. See here.)

My take on the situation is that the conservative justices have no patience for dividing Americans by race. In their minds, they are attempting to prevent America from becoming Yugoslavia 100 years from now. One of Justice Alito's quotes from a different case could summarize the majority's feelings: "It is a sordid business, this divvying us up by race.” The majority opinion forcefully points out that under the Seattle program, if a school was 30% Asian, 30% Hispanic, 10% African-American, and 30% Caucasian, this breakdown would not be sufficiently diverse. Justice Roberts' example implies that this is a different world than 1975.

The liberal justices, on the other hand, believe that in much of America, we are still segregated by race. A cursory glance at any BLS or Census statistics will show lower rates of net worth and home ownership in the African-American community than in any other community. Although not stated in the opinion, the liberal justices seem to imply that the only reason for such modern disparity is the legacy of slavery and unequal access to education. It is not mentioned in the opinion that most of the conservative justices worked or are from large cities that are more integrated than smaller cities in the South. In much of America, it is indeed true that not much has changed since 1975. On the other hand, Justice Thomas's opinion seems to carry more weight because he actually integrated schools, sometimes against the wishes of classmates and parents of other students. An unsung hero, Rev. John Brooks, was instrumental in Thomas's education, and an interview given to BusinessWeek provides the most insight I have seen about Thomas and his background. See here (3/12/07, interview & Rev. John E. Brooks).

While it may seem counterintuitive that Justice Thomas would side with Justice Roberts here, Thomas may believe that his personal experience actually supports the majority's arguments because there was no de jure segregation at the time, and as a result he was able to attend majority-white schools and receive a top-notch education. Thus, Thomas may view Seattle through the prism that he is not dealing with any law forcing segregation, and any rule classifying anyone based on race could very easily turn against him or another race in the future. Jim Crow, after all, was not that long ago.

Perhaps an economic analysis would be helpful in understanding the majority opinion. Schools receive much of their funding from local property taxes. Housing values closely correlate with local school quality, as parents are willing to spend more money to buy into a better school district. See The New Economics of the Middle Class: Why Making Ends Meet Has Gotten Harder, by Elizabeth Warren and Leo Gottlieb:

Failing public schools have an impact on the children trapped in them, but they also impose a terrible burden on the families struggling to escape them. Failing public schools translate directly into higher housing costs for middle class families as they try to escape those schools. Home prices have grown across the board (particularly in larger urban areas), but the brunt of the price increases has fallen on families with children. The home value for the average childless couple increased by 58 percent between 1984 and 2004—an impressive rise in less just twenty years. (Again, these and all other figures are adjusted for inflation.) For married couples with children, however, housing prices shot up 145 percent during this period—nearly three times faster.

The Seattle parents were paying lots of money in mortgage payments and local taxes and were being told that some of their kids would have to go to an inferior quality school as part of a greater good. The students benefiting from the Seattle program would be students who, but for the program, would have to go to poorly funded schools. The students from poorer school districts would probably come from families that did not pay as much money in taxes or who lived in apartments (thereby not paying property taxes). Thus, the Seattle program indirectly charged parents who paid more in taxes more money for an inferior product while gifting parents who paid fewer taxes with a better product. In California, we had a lawsuit that argued that property taxes should go to the state rather than the county and then distributed among school districts in amounts to prevent inequality. I am unclear how Washington or Kentucky, the other state affected by the opinion, distributes its property taxes. The opinion did not discuss anything about vouchers, either. It remains to be seen what impact the opinion will have on voucher advocacy movements.

For now, in a time in America when we have ample resources and the economic "pie" is large, the Seattle decision will not create massive problems in the near term. The question is how we will view the decision if a sustained recession occurs, bringing to light the economic inequality in America that oftentimes can be categorized by race. A middle ground post-Seattle might be to balance schools by income, thereby avoiding any legal review or analysis. Federal courts do not usually get involved in a state's local affairs absent some illegal activity or protected class, and rich/poor is a category that is not illegal nor protected. America spends 400 billion dollars a year on schools, according to Revolutionary Wealth by Alvin Toffler. With that much money, perhaps the "pie" is still big enough to focus on economic rather than judicial solutions to improve school quality.

Thursday, June 28, 2007

Gandhi, Revisited

One interesting aspect of living in Santa Clara County, where around 37.5% of residents are immigrants, is that I get to hear about history from people who've experienced it firsthand. Today, my clients, who were Sikhs, told me that although Gandhi received much of the credit for liberating India from Britain, there were actually civilian militias that fought against the British for independence. This was not discussed in the 1983 film, but my clients lived about 30 km from the site of the scene of the massacre depicted in the film, where thousands of unarmed Indians were shot dead by a British firing squad. It appears that many men of peace have been aided indirectly by armed defenders who cannot be recognized.

I also learned that the Sikh philosophy contains much of the Hindu philosophy, but with the difference that the Sikhs believe in one God, not several. Another interesting tidbit is that the Sikhs are also known as brave warriors who fought valiantly in several wars, including in WWII.

Wednesday, June 27, 2007

Hamiltonian Capitalism

A TV special on Alexander Hamilton from PBS's American Experience taught me more about why America is so successful. We all know America has created incredible stability in just 200 years, and regardless of where America stands 200 years from now, if other countries also achieve affluence, it will be through copying America's economic system. In actuality, what people will be doing is copying Hamilton's vision. One of the best quotes from the PBS special was that although Lincoln, Jefferson, and FDR have monuments in D.C., no monument exists for Hamilton. The scholar says that is fine: modern America is Hamilton's monument.

Hamilton fought for a national banking system against Jefferson's agrarian vision, was born in the West Indies to an unmarried mother, received only some books as an inheritance, and worked as an accountant as a teenager and as a lawyer afterwards. Understanding the U.S. as Hamilton's country opens our eyes to exactly why modern America works. One, Hamilton wasn't part of "the club." In fact, without George Washington's interventions on his behalf, he may have never been of any consequence. Because Hamilton had to work for a living, he created a system where anyone--even the bastard immigrant child of a single mother such as himself--could live in stability.

Hamilton, as a teenager, saw slaves being treated very poorly in the West Indies. As a result, the quasi-documentary insinuates that while Jefferson seemed comfortable owning slaves, the lesson Hamilton learned from slavery is that mankind's passions had to be corralled. Thus, one goal of Hamiltonian capitalism is to reduce and control men's passions through a system that includes protection of property; rewards for delayed self-gratification; strict enforcement of contracts; and when all else fails, imprisonment. Such a system, by encouraging materialism and hard work, forces people to think locally and have a vested stake in local rather than non-profitable or international events. In fact, some might say capitalism works precisely because it causes an investment in local matters. The average person's day is spent on bosses to placate, work to be done, debt to pay off, television to watch, kids to feed, and bills to be paid. There is no time, or it is not profitable, to think of solving larger issues that one cannot affect. The upside of capitalism's gimlet eye is that it forces us to live in the here and now; the downside is that it works too well--apparently, only 10 to 21% of Americans own passports. I am a huge fan of Jefferson--no one can match his passionate defense of the individual--but seeing this PBS special made me think more about Jefferson's vision versus Hamilton's vision for America, with the conclusion being that Hamilton's vision created modern-day America, while Jefferson's vision would have created an economy similar to modern-day China.

An interesting link:

Tuesday, June 26, 2007


The July 2007 issue of Vanity Fair focuses on Africa and U2's Bono is the guest editor. The magazine has around fifteen different and eye-catching covers with various personalities, including one with Warren Buffet. The magazine features interviews with Jeffrey Sachs and Desmond Tutu (who is interviewed by Brad Pitt), and a picture of the real star of Tsotsi, Terry Pheto.

While Bono, Clooney, and others have attempted to interest the world in Africa's plight, the only nation that really seems to want to be serious about engaging with Africa on a long term basis is China. The China-Africa partnership is not an exercise in altruism: China needs natural resources; Africa has them; and you don't need to be Sherlock to see that China is acting in its self-interest. Other countries also contribute aid, but the magazine points out that America spends only 0.17% of our budget on aid (the U.N. goal is 0.7%). For those of us who argue that money will make no difference in a corrupt Africa, Mr. Sachs argues that the money given has not been enough. He contends that we could solve the problem with 20 billion dollars and that the aid given thus far has worked but is not sufficient to create any sustained change. He compares detractors' arguments against aid to fighting a wildfire with a hose, and when the water runs out from the hose, claiming that water does not cure fires because the fire still rages.

There are several issues with attempting to solve world poverty. On the surface, it appears that we could, acting in concert, feed all the world's hungry. We certainly make enough food and can transport it anywhere. For example, I am drinking water imported from Iceland that I bought with a coupon from Walgreen's for one dollar. If I, an average Californian resident, can get Icelandic water for one dollar (admittedly, the cost is half of what at least a billion people earn every day), it seems that affluent nations should be able to eliminate diseases that come from contaminated water. However, affluent nations have mostly capitalistic systems, with the exception of possibly Scandinavian countries. As a result, transferring large amounts of tax revenue from one country to another without receiving something in return is generally not feasible. Many Americans would probably chafe if 1% of our GDP is spent on international aid during a time of internal crisis, such as Katrina.

Having said all that, one quote caught my eye: a person interviewed said that Africans must become self-reliant to avoid a situation where Africa becomes the "white man's burden." It is a stunning reminder that just a few of the world's nations control most of the world's wealth. Although millionaires are newly minted in India and China on a weekly basis, most of the world's money is probably still in Dubai, New York, the U.K., Switzerland, Hong Kong, Tokyo, and Singapore. As a result, one possible reason for inertia is the mere fact that most citizens from these "monied" nations lack a firm connection with poor nations such as Africa or Bangladesh. Still, pointing to an absence of shared race appears to be a simplistic answer, especially in an age where we are mixing together culturally and biologically.

One of the prevalent themes in the magazine was the appeal to shared humanity. Minister Tutu went so far as to say that a person who is completely self-sufficient is sub-human. Maya Angelou more eloquently stated that she takes an interest in all human beings because she is a human being and therefore no human being can be alien to her. The point being made is as follows: "Let him who expects one class of society to prosper in the highest degree, while the other is in distress, try whether one side of the face can smile while the other is pinched." But one of the surprising elements of the 21st century is how easily affluent people can wall themselves off from the impoverished without consequence. (For those who point to 9/11 as one counterargument, the attackers were actually affluent and educated.)

Indeed, the world is becoming more stratified, not less, as money flows more rapidly. The rich can, if they choose, congregate only in particular neighborhoods; go to private schools; and get plush jobs through connections. Part of this de facto segregation is because wealth is becoming more earned than inherited, and people who make lots of money tend to work with affluent, educated people. Another part of it might be inertia: if you are raised with golf and tennis lessons, you may be perfectly happy spending your free time doing those activities at the local country club during your free time.

In any case, it is becoming obvious that people can become rich and stay comfortably rich without ever assisting or coming into contact with the poor. The inequality is even apparent in the retail sector: Neiman Marcus and Tiffany's are doing better than ever, while companies attempting to cater to the middle class, like JC Penny, Mervyn's, and Sears, are having trouble. So the 21st century is the age of inequality and yet also an incredible time to be alive if one lives in a first-world country.

Given our modern acceptance of financial stratification, moral arguments about equality and all of us being human may not be effective in an era where capitalism requires most of us to focus on local and profitable events; where most wealth is earned, making it difficult to argue that wealth should be shared because it is a matter of luck; and where religion is waning as a source of persuasion. So the 20 billion dollar question remains: how do we connect up the poor with the resources necessary to allow them to prosper?

One solution could be that Africa could organize its own OPEC. It certainly has enough natural resources to do this, and if it does not, it may be beholden to China for the next century rather than becoming self-sufficient. (Though this may not be a bad thing:

A second solution could be to adopt the Saudi Arabian model: the Americans helped the Saudis find and remove oil, but after a certain period of time, the companies reverted to local control. Thereafter, the Saudis exchanged resources for technology and infrastructure and now are investing in non-traditional vehicles such as hedge funds. Today, there are few poor Saudi citizens.

Beyond those suggestions, I have no solutions about how to bring Africa--20% of the world population--out of poverty. Africa has great human capital--many Africans speak several languages, which will assist them in an increasingly global economy. Major cities, like Nairobi, are relatively affluent--my friend tells me everyone there has cell phones--while smaller cities lack basic water and food supplies. In the end, perhaps Bono is doing the most anyone can do: raise money and awareness, and let the Africans develop their own pace of progress. In the meantime, I will keep contributing to